4

Vodafone Calls iPhone Foul

There are words for someone who refuses to join a party but then runs home to call the police to come break up the bash, but I can't print them here.

The German arm of mobile services giant Vodafone (NYSE: VOD) donned the crown of concerned corporate citizen and persuaded a Hamburg court to act against competitor Deutsche Telekom (NYSE: DT) for selling locked versions of the Apple (Nasdaq: AAPL) iPhone. The court granted a temporary injunction against Deutsche Telekom's T-Mobile unit and its practice of selling the iPhone in combination with a two-year contract.

Vodafone, which reportedly turned down the opportunity to carry the iPhone, argues that selling an unsubsidized, locked device with a contract violates German competition laws. T-Mobile disagrees, and another hearing will take place in a few weeks to help clear up the mess.

Of course, Vodafone wants the iPhone to continue shipping unabated -- as long as users can activate the phone on its network so it can charge for voice minutes and data. Given that iPhone users tend to be more spendthrift than the average subscriber, operators that activate iPhones can look forward to lucrative payouts for supporting all the media features of the device.

But unlocked iPhones are not the ideal world that Apple envisioned. There are widespread rumors that Apple earns a share of the recurring revenue earned by its exclusive operator partners. In return, Apple gives exclusive rights to a single operator in each region, as it has done with AT&T (NYSE: T) in the U.S. and is reportedly looking to do with China Mobile (NYSE: CHL) in China. Unlocked iPhones operating on non-partner networks not only mean less revenue for Apple, but the exclusive operator/partner as well. In France, exclusive Apple partner France Telecom (NYSE: FTE) will be selling both locked and unlocked iPhones to meet local laws.

Apple and its partners will have to tread carefully as the iPhone becomes more mainstream -- consumers are less than thrilled about being tied into expensive contracts as well, especially when they pay several hundred dollars for the device up front. Just as Apple generated some consumer wrath for dropping iPhone prices too quickly in the U.S., Team Jobs will likely be the target of more complaints because of its ongoing success.

Fool contributor Dave Mock wakes up in cold sweats some nights yelling "Go, Speed Racer! Go!" He owns no shares of companies mentioned here. Dave is the author of The Qualcomm Equation. China Mobile is a Global Gains recommendation and France Telecom is an Income Investor recommendation. The Fool's disclosure policy is a demon on wheels.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment icon found on every comment.